Sluggish Growth, More Job Loss in 2010: El-Erian

The US economy could be facing more problems with job losses and slower growth in 2010, Pimco's Mohamed El-Erian told CNBC Tuesday.

"We think that the second half of 2009 will be turbo charged by the stimulus and there will be a hand off to the consumer and that's what you want,"  El-Erian said. "But it's going to be challenging. We worry that 2010 is going to have sluggish growth and high unemployment and lower valuations."

As for the run up in gold prices, El-Erian said it's not a good sign for the US economy.

"I worry when I see gold doing what it's doing and the dollar doing what it's doing," El-Erian said. "It's an indication that the world is starting to worry about the US and we have to take these signals seriously."

As for the run on corporate bonds, El-Erian said caution should be exercised. "It's been a wonderful run but most recently, money is being pushed into the sector," El-Erian said. "I would focus on high grade companies, companies that have their financials and operating leverage under control."

El-Erian also said now is not the time for risk in the stock market. "I would reduce risk and wait for a better time," said El-Erian. "I think there are a lot of people chasing risk assets now for a lot of reasons, but the long term investor can be patient because the economy is likely to face strong head winds in 2010."

• Slideshow: Biggest Holders of US Government Debt